This invention relates to methods and apparatus for implementing and administering an insurance investment program to fund future liabilities whose present cost is known and whose future cost is unknown but can be projected with some risk factor.
Generally, insurance programs protect against the uncertain need to fund a liability of certain value, for example, the need to replace a car or a home in case of its loss or the need to provide a source of income in case of disability or death. Insurance programs are also used to protect against relatively large liabilities with a relatively small probability of occurrence, for example, personal injury liability.
Recently, investment programs such as mutual funds have come into existence to lower the risk which an individual must assume in investing his assets by combining the assets of many individuals into a common fund invested in a diversity of assets. These programs may be managed to maximize their yield, but they are not managed to provide a yield needed to fund any particular liability. Thus they have no insurance protection aspects.
However, there is no easy way for an investor to fund a relatively certain future liability of uncertain cost, such as the cost of a college education, in a way that also provides insurance protection for meeting that liability.